Posted on Feb 9, 2022
Filing Taxes in the Military: A how-to guide navigating free tax preparation services & benefits
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The bad news is it’s officially tax season. The better news is that if you’re a service member or a Veteran, there are free services and benefits to maximize your refund — or reduce what you owe — this tax season.
Returns are due April 18, 2022. Before you file, see if you can pocket more money at tax time by tapping into these resources and programs:
Get military-specific tax advice and services. If you’re in the military, the free MilTax tax preparation and e-filing service opened Jan. 25, 2022, the U.S. Department of Defense (DOD) announced. “We know there are many other tax products out there, but MilTax is 100% free of charge [without] rank or pay restrictions,” Kelly Smith, program analyst with DOD’s Military Community and Family Policy, told DOD news on the day the Military OneSource tax forum launched for the 2022 tax filing season.
Smith said service members can rely on MilTax consultants to get answers to military-specific tax questions such as those related to the Military Spouse Residency Relief Act, which, she said, “applies when a spouse lives in a state different from his or her residency state.” She added that MilTax consultants can assist with other military-related tax queries such as whether tax deductions apply to moving, travel and lodging expenses.
Details: Access MilTax at: https://rly.pt/33ebvyE
See if you qualify for a filing extension. If you’re a service member serving in a combat zone, or operate in a civilian role in support of U.S. Armed Forces serving in a combat zone, you may qualify for an automatic tax filing extension. Details: Read the IRS question-and-answer page on this topic at https://www.irs.gov/newsroom/extension-of-deadlines-combat-zone-service.
Get free tax preparation services. If you’re a Veteran in an older age bracket or have a service-related disability, explore the IRS’s Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs. The IRS said the programs, which train and certify volunteers to provide tax services to qualifying individuals and families, have prepared 1.3 million tax returns for Veterans since 2015.
VITA offers free tax-return assistance if you make less than $58,000, have a disability or speak limited English. TCE services assist you with pension and retirement issues if you’re over age 60. Details: Learn about these programs and other Veteran-related tax services and benefits at https://www.irs.gov/individuals/information-for-veterans.
Access IRS Free File. Just about anyone who makes $73,000 or less in adjusted gross income, including Veterans, can now get no-cost guided federal tax return preparation services through the IRS Free File system. Details: https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free.
Watch for these taxing issues in 2021
Here are a few other issues that may impact your 2021 tax return:
Account for the child tax credits. A complicating factor for tax year 2021 for filers with children — including if you’re in the military or are a Veteran — relates to the expanded child tax credit enacted as part of the American Rescue Plan Act (ARPA).
According to the Tax Foundation and the IRS, the law increased the value of the credit in 2021 from $2,000 to $3,600 for younger children or $3,000 for older children. In addition, ARPA eliminated income and other requirements, which qualified more households. Advanced payments were another new feature of the 2021 credits: If you were eligible, you could have received 50% of the child tax credit in advance of the estimated amount you planned to claim on your 2021 tax return, and the remaining half when you filed your 2021 tax return. If you opted for them, these advanced monthly payments started July 15 and continued until December 2021.
These payment aren’t reported as income, the IRS said, but issued this caution in a Jan. 11 question-and-answer roundup on the topic: “If the total of your advance Child Tax Credit payments is greater than the Child Tax Credit amount that you are allowed to claim on your 2021 tax return, you may have to repay the excess amount on your 2021 tax return during the 2022 tax filing season.”
However, you may qualify for income-based repayment protection, the IRS said.
Details: Read more about this topic at: https://rly.pt/3uD0SRk
Explore the Earned Income Tax Credit (EITC). This refundable tax credit is available to you whether you’re in the military or are a Veteran, as long as you meet the requirements. And for 2021, the program was also expanded, the IRS said in a Jan. 28 news release. More childless workers, couples and seniors qualify. The maximum credit also tripled for a filer with no qualifying children to $1,502 in 2021 from $538 in 2020. A married couple with three or more children earning an income of $57,414 can now claim a maximum EITC of $6,728, up from $6,660 last year.
In 2021, the EITC is available to taxpayers with no qualifying children who are at least 19 years old with earned incomes below $21,430. For spouses filing a joint return, the EITC is available to those with earned incomes of $27,380.
There are also exceptions for people who are 18 years old and were once in foster care and for those who are experiencing homelessness. And, the IRS said, you can claim the credit at any age as long as you have earned income — the benefit is no longer capped at age 64.
Note that if you’re claiming the EITC while in the military, the IRS applies special rules related to nontaxable military pay (i.e., combat pay and housing and subsistence allowances) and if you were stationed outside the United States. For instance, you and your spouse can choose to count nontaxable pay as earned income for the EITC if it would benefit you at tax time. The IRS’s EITC qualification assistant calculator can help you understand your options.
Details: Learn more about expanded EITC benefits at: https://rly.pt/3sw64n6 Access EITC information for the military at: https://rly.pt/3B7gvBq. Use the EITC assistant tool at https://rly.pt/3sMdaEr
Inquire about the 2021 Recovery Rebate Credit. If you didn’t qualify for any Economic Impact Payment, which were issued starting in March 2021, or received less than the full amount, you could get a Recovery Rebate Credit based on your 2021 tax year information, according to the IRS. Details: Get more information about this rebate at https://www.irs.gov/newsroom/recovery-rebate-credit.
Prepare for paying federal income tax when you retire from the military. Understand your tax obligations when you retire from the military, which could be more than you expect if you still work in the civilian sector and also receive retirement pay. Details: Access the IRS fact sheet, “Federal Income Tax Withholding After Leaving the Military,” at https://www.irs.gov/pub/irs-pdf/p4782.pdf.
Learn more
Get the Armed Forces’ Tax Guide for Use in Preparing 2021 Returns: https://www.irs.gov/pub/irs-pdf/p3.pdf.
Read the DOD news article, “MilTax Online Tax-Filing Forum Opens Doors to Service Members, Families”: https://rly.pt/3rBStLI
Read the Tax Foundation’s post, “Bumpy Tax Filing Season Ahead Due to IRS Backlog and Pandemic Tax Relief”: https://rly.pt/3gwZCa7
Review the IRS page with links to military and Veteran tax programs: https://www.irs.gov/individuals/military.
Returns are due April 18, 2022. Before you file, see if you can pocket more money at tax time by tapping into these resources and programs:
Get military-specific tax advice and services. If you’re in the military, the free MilTax tax preparation and e-filing service opened Jan. 25, 2022, the U.S. Department of Defense (DOD) announced. “We know there are many other tax products out there, but MilTax is 100% free of charge [without] rank or pay restrictions,” Kelly Smith, program analyst with DOD’s Military Community and Family Policy, told DOD news on the day the Military OneSource tax forum launched for the 2022 tax filing season.
Smith said service members can rely on MilTax consultants to get answers to military-specific tax questions such as those related to the Military Spouse Residency Relief Act, which, she said, “applies when a spouse lives in a state different from his or her residency state.” She added that MilTax consultants can assist with other military-related tax queries such as whether tax deductions apply to moving, travel and lodging expenses.
Details: Access MilTax at: https://rly.pt/33ebvyE
See if you qualify for a filing extension. If you’re a service member serving in a combat zone, or operate in a civilian role in support of U.S. Armed Forces serving in a combat zone, you may qualify for an automatic tax filing extension. Details: Read the IRS question-and-answer page on this topic at https://www.irs.gov/newsroom/extension-of-deadlines-combat-zone-service.
Get free tax preparation services. If you’re a Veteran in an older age bracket or have a service-related disability, explore the IRS’s Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs. The IRS said the programs, which train and certify volunteers to provide tax services to qualifying individuals and families, have prepared 1.3 million tax returns for Veterans since 2015.
VITA offers free tax-return assistance if you make less than $58,000, have a disability or speak limited English. TCE services assist you with pension and retirement issues if you’re over age 60. Details: Learn about these programs and other Veteran-related tax services and benefits at https://www.irs.gov/individuals/information-for-veterans.
Access IRS Free File. Just about anyone who makes $73,000 or less in adjusted gross income, including Veterans, can now get no-cost guided federal tax return preparation services through the IRS Free File system. Details: https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free.
Watch for these taxing issues in 2021
Here are a few other issues that may impact your 2021 tax return:
Account for the child tax credits. A complicating factor for tax year 2021 for filers with children — including if you’re in the military or are a Veteran — relates to the expanded child tax credit enacted as part of the American Rescue Plan Act (ARPA).
According to the Tax Foundation and the IRS, the law increased the value of the credit in 2021 from $2,000 to $3,600 for younger children or $3,000 for older children. In addition, ARPA eliminated income and other requirements, which qualified more households. Advanced payments were another new feature of the 2021 credits: If you were eligible, you could have received 50% of the child tax credit in advance of the estimated amount you planned to claim on your 2021 tax return, and the remaining half when you filed your 2021 tax return. If you opted for them, these advanced monthly payments started July 15 and continued until December 2021.
These payment aren’t reported as income, the IRS said, but issued this caution in a Jan. 11 question-and-answer roundup on the topic: “If the total of your advance Child Tax Credit payments is greater than the Child Tax Credit amount that you are allowed to claim on your 2021 tax return, you may have to repay the excess amount on your 2021 tax return during the 2022 tax filing season.”
However, you may qualify for income-based repayment protection, the IRS said.
Details: Read more about this topic at: https://rly.pt/3uD0SRk
Explore the Earned Income Tax Credit (EITC). This refundable tax credit is available to you whether you’re in the military or are a Veteran, as long as you meet the requirements. And for 2021, the program was also expanded, the IRS said in a Jan. 28 news release. More childless workers, couples and seniors qualify. The maximum credit also tripled for a filer with no qualifying children to $1,502 in 2021 from $538 in 2020. A married couple with three or more children earning an income of $57,414 can now claim a maximum EITC of $6,728, up from $6,660 last year.
In 2021, the EITC is available to taxpayers with no qualifying children who are at least 19 years old with earned incomes below $21,430. For spouses filing a joint return, the EITC is available to those with earned incomes of $27,380.
There are also exceptions for people who are 18 years old and were once in foster care and for those who are experiencing homelessness. And, the IRS said, you can claim the credit at any age as long as you have earned income — the benefit is no longer capped at age 64.
Note that if you’re claiming the EITC while in the military, the IRS applies special rules related to nontaxable military pay (i.e., combat pay and housing and subsistence allowances) and if you were stationed outside the United States. For instance, you and your spouse can choose to count nontaxable pay as earned income for the EITC if it would benefit you at tax time. The IRS’s EITC qualification assistant calculator can help you understand your options.
Details: Learn more about expanded EITC benefits at: https://rly.pt/3sw64n6 Access EITC information for the military at: https://rly.pt/3B7gvBq. Use the EITC assistant tool at https://rly.pt/3sMdaEr
Inquire about the 2021 Recovery Rebate Credit. If you didn’t qualify for any Economic Impact Payment, which were issued starting in March 2021, or received less than the full amount, you could get a Recovery Rebate Credit based on your 2021 tax year information, according to the IRS. Details: Get more information about this rebate at https://www.irs.gov/newsroom/recovery-rebate-credit.
Prepare for paying federal income tax when you retire from the military. Understand your tax obligations when you retire from the military, which could be more than you expect if you still work in the civilian sector and also receive retirement pay. Details: Access the IRS fact sheet, “Federal Income Tax Withholding After Leaving the Military,” at https://www.irs.gov/pub/irs-pdf/p4782.pdf.
Learn more
Get the Armed Forces’ Tax Guide for Use in Preparing 2021 Returns: https://www.irs.gov/pub/irs-pdf/p3.pdf.
Read the DOD news article, “MilTax Online Tax-Filing Forum Opens Doors to Service Members, Families”: https://rly.pt/3rBStLI
Read the Tax Foundation’s post, “Bumpy Tax Filing Season Ahead Due to IRS Backlog and Pandemic Tax Relief”: https://rly.pt/3gwZCa7
Review the IRS page with links to military and Veteran tax programs: https://www.irs.gov/individuals/military.
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